3 December 2013
Media Statement

Bill to rein in housing development charges passes first reading

Housing Minister Dr Nick Smith today welcomed Parliament’s first reading of a bill which narrows the range of infrastructure costs councils can charge housing developers and introduces an independent appeals process.

“This bill to constrain development contributions is an important part of the Government’s work programme to improve housing affordability. These charges on housing developments have gone up by more than any other component of housing costs over the past decade from an average of $3,000 to $14,000 and are as high as $64,000 per section in some communities,” Dr Smith says.

“This reform reverses the previous Government’s 2002 Local Government changes that gave councils carte blanche to charge developers whatever they liked with no check or right of appeal. It is clear from the Productivity Commission’s 2012 report that this has had a negative impact on housing affordability.

“The changes will narrow the charges councils can put on new sections. Development contributions need to be set in a way that fairly balances the costs that should rightly rest with a new development and those of community benefit that should be paid by general ratepayers.

“The legislation also limits what councils can charge in respect of commercial and industrial developments. This means developers will not bear the cost for recreational facilities or reserves for developments that do not involve residential housing.

“The bill also provides an independent objections process and encourages the direct provision of necessary infrastructure to help get costs down.

“These changes are an important part of the Government’s response to housing affordability. We’ve got a new law to fast-track the supply of new land for housing, we’ve got options out for consultation on getting building material costs down, we’re investing heavily in skills and productivity, we’re reducing building and resource management compliance costs, and we’re expanding the Welcome Home Loans and KiwiSaver First Home Deposit Subsidy schemes to support first home buyers,” Dr Smith says.

The bill has been sent to the Local Government and Environment Select Committee for public submissions and is due to be reported back to Parliament in May.
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